Get mortgage happy. 020 8517 1141

01 Apr 2023

Base rate increases

I’d like to talk about base rate increases and how they have, or have not affected mortgage rates…

April numbers

Most readers keep an eye on base rate announcements, so you wouldn’t have missed the Bank of England’s recent increase in rate from 4% to 4.25%.

The MPC voted 7-2 to increase interest rates, driven by the fact inflation is still not under control rising to 10.4%, well above the target rate of 2%.

Economists predicted rates would top out at 4.25%, although with inflationary pressures still circling, Barclays raised their prediction this week to 4.50%.

Despite these base rate increases, lenders use another rate to price their mortgages called Swap Rates.

The specific Swap Rate is known as the SONIA rate which replaced LIBOR. Without getting technical, it is the rate at which banks can borrow money and this is predicted into the future.

Put simply, when the five-year SONIA rate goes down, lenders tend to reduce their five-year fixed-rate mortgages.

Two-year fixed rates are currently being offered at a higher rate than five-year fixed rates. (This hasn’t been the case in my twenty years!)

Looking back, a year ago in March 2022 the five-year SONIA rates were at 1.86%, the five-year fixed rate at the time would have been circa 1.99%.

Residential mortgage rates are now being offered at around 3.99% fixed for five years. Lower than the base rate but slightly higher than the current five-year SONIA.

My point being - it’s not all about the base rate when taking a mortgage, book in to have a call with one of the team and let us help you run your numbers.

Use our simple booking system Book My Call.

Base rate increases

Privacy notice

HOME OF MORTGAGES will be what is known as the ‘controller’ of the personal data you provide to us. We only collect basic personal data about you which does not include any special types of information or location-based information.

Why do you need my data and what will it be used for?

We need to know your basic personal data so we can make contact with you and respond to your message, request or query. All the personal data we process is processed by our staff in the UK.

Who is my data shared with?

Your data will only be shared with third parties if this is necessary to respond to your request. If this is the case, we will seek your permission before passing on your details.

How long do you keep my data for?

We may store your data for up to six years past the end of any business relationship, after which time it will be securely destroyed. If you would no longer like us to process your data at any time, you have the right to object to processing of your data. To do this, please contact advice@homeofmortgages.co.uk.

What are my rights?

You have the right to object to the processing of your data. You also have the right to request access to your data at any time. You have the right to rectification and/or erasure of personal data or restriction of processing. If you wish to raise a concern related to how we have handled your personal data, you can contact us to have the matter investigated at compliance@sdlgroup.co.uk. If you are not satisfied with our response or believe we are processing your personal data not in accordance with the law, you can complain to the information commissioner’s office: https://ico.org.uk